President's Newsletter

I hope you are enjoying the holidays and getting some down time with family and friends. I want to take this opportunity on behalf of the Council and our staff to wish each and everyone a very Happy New Year. May 2019 be a year full of good health, happiness and prosperity for you, your family and your organization.

Before I begin, on November 30, we mourned the loss of the 41st President of the United States, George Herbert Walker Bush. Throughout the many decades he devoted to public service, President Bush employed tactful leadership, thoughtful statecraft and a true understanding of diplomacy to ensure America’s role as a leader on the global stage as the Soviet Union came to an end, Germany Unified, and globalization took root. Through it all, he was a steadfast friend of free trade and to ASEAN. He realized early in his career the tremendous potential the region holds. I was deeply saddened by the news of President Bush’s passing. It was the honor of my life to have started my career in his administration and to have been a very small part of a number of the historic moments he inspired and championed, including his 1992 trip to Asia where he was the very first American President to visit Singapore. On the Council’s 30th Anniversary in 2014, he was kind enough to write to us and remember the role the Council played in one of the most important regions of the world. It was classic President Bush – thoughtful, candid and personal. You can find the full text of the letter here, as well as the Council’s press release on his passing here.

December was another busy month for the Council as we closed out the year. Highlights included our second annual engagement with the ASEAN Telecommunications Ministers in Bali and our annual business mission to Myanmar. We expect that Thailand will continue to move forward with planned elections on February 24 next year, as well as preparations for chairing ASEAN next year.

Our Board of Directors held their final Board Meeting in Bangkok at the end of November. We took the opportunity to ensure the Board had a better understanding of the upcoming elections, meeting with political leaders from two of the leading parties. The upcoming elections will be vastly different from any Thai election in recent memory and will mean that no party will be able to obtain an absolute majority in the lower house of parliament, which should ensure that a coalition government will guide Thailand after the February 24th election. Currently over a hundred parties are registered to participate in the elections, though it is unclear which parties will officially be on the ballot. The three major parties participating in the election are the Democratic Party, led by former Prime Minister Abhisit Vejjajiva; the Pheu Thai Party, which is the party of former Prime Minister Thaksin Shinawatra and is currently led by former Deputy Prime Minister Mr. Viroj Pao-In; and the Phalang Pracharat Party, which is led by current Minister of Industry Uttama Savanayana. As a consequence of the Thai election in February, most of the ASEAN calendar has been pushed back. For instance, the first of the two Leaders Meetings which normally occurs in April has been pushed back to June in 2019. Please check the Council’s Calendar for the latest in the ASEAN schedule for 2019 as we currently understand it.

From December 4-6, the Council led a Mission to the annual ASEAN Telecommunications and IT Ministers Meeting (TELMIN) in Ubud, Indonesia. The Council brought a delegation of 13 leading American ICT companies at the forefront of the grow of the Digital Economy in ASEAN. We were honored to have the Chair of the Council’s ICT Committee, Naveen Menon, who is also CISCO’s ASEAN President and Ralph Haupter, Microsoft’s President of Asia Pacific, lead the discussion with the Ministers over lunch. During lunch with the TelMin, our first ever plenary session, we looked to the future to touch on major issues on the horizon including Block Chain, 5G, Industry 4.0 including additive manufacturing, the work force of the future, and a deep dive on Artificial Intelligence (AI) and the implications of these topics on the policy environment in ASEAN. We emphasized the need for resilient regulatory frameworks that were open to stakeholder feedback in the development of policy and regulations and are in alignment with global best practices, remaining open to innovation and conducive to the free flow of data.

We also continued our successful SME events in Hai Phong, Vietnam and Yangon, Myanmar. On November 21, more than 200 multi-industry Small and Medium-sized Business (SMBs) owners and executives from Hai Phong and neighboring cities participated in a one-day SMB workshop titled “Elevating SMBs into Industrial Revolution 4.0 and Inclusive Global Value Chains”. On December 10, more than 200 multi-industry Small and Medium-sized Enterprises (SMEs) owners and executives from Yangon and surrounding cities participated in a one-day SME workshop titled “Digital Transformation to Boost Competitiveness”.

Finally, we concluded the year with our Myanmar Business Mission, December 11-13 in Yangon and Nay Pyi Taw. The Council's delegation of 12 leading American companies had the opportunity to engage with the newly created Ministry for Investment and Foreign Economic Relations (MIFER), among other key ministries. This ministry, which was just created in November, is headed by Union Minister U Thaung Tun, who concurrently serves as National Security Advisor and as Chairman of the Myanmar Investment Commission. The aim of the new Ministry is to streamline the investment process (which includes company registrations, sectoral approvals, permits etc.) and serve as a "one stop shop" for all new and existing investors to improve the ease of doing business in Myanmar. This development can be seen as a step in the right direction in the Myanmar Government's effort to attract more Foreign Direct Investment and to achieve the full potential of newly amended legislation such as the Myanmar Investment Law and the Myanmar Companies Law. The Council has long advocated for the need to streamline the internal approval processes across various ministries and we welcome this as a new positive development. We were also proud to have been the first foreign delegation to have met with the Minister U Thaung Tun since he took on this new role.

Highlights

Looking Ahead

Business Mission to the ASEAN Tourism Ministers’ Meeting, January 16-18. The Council will lead a delegation of senior-level executives on its Business Mission to the 22nd Meeting of ASEAN Tourism Ministers (M-ATM) in Ha Long Bay, Vietnam. This will be the second time the Council would lead a travel and tourism mission following its inaugural mission to Chiangmai, Thailand last year. The mission will consist of a plenary consultation session and bilateral meetings with ASEAN Tourism Ministers. Officials with whom the delegation plans to meet are H.E. Nguyen Ngoc Thien, Minister of Culture, Sports and Tourism of Vietnam; H.E. Arief Yahya, Minister of Tourism of Indonesia; H.E. Mohammadin bin Haji Ketapi, Minister of Tourism, Arts, and Culture of Malaysia; H.E. Bernadette Romulo-Puyat, Tourism Secretary of the Philippines; Mr. Keith Tan, Chief Executive of the Singapore Tourism Board; H.E. Weerasak Kowsurat, Minister of Tourism and Sports of Thailand; and Dr. Aladdin D. Rillo, Deputy Secretary-General of the ASEAN Secretariat. To register for the mission, please click here.

Brunei Business Mission, January 29-30: The mission’s themes will be to support the government’s economic diversification efforts, while also recognizing the significance of the oil and gas sector; promote growth in the sectors of tourism, health, infrastructure and digital economy – sectors which are in line with Brunei government’s diversification efforts and interests. This timely mission is especially valuable in light of Brunei’s cabinet reshuffle, allowing members to directly engage new cabinet ministers and other high-level officials. The Brunei government is eager to meet the U.S. private sector to discuss economic opportunities, and is looking forward to a productive engagement early in 2019. Please note that registration is now open and the deadline is January 15. To register, please click here.

Advocacy

The Council is continuing its advocacy efforts with the Government of Vietnam regarding their new Law on Cybersecurity (LOCS). Following submission of comments on draft versions of the law, earlier this month the Council assembled feedback from members and formally transmitted comments on the final version of Draft Implementation Decree of the LOCS. The Council also conducted advocacy efforts on the LOCS in Hanoi via a special “door knock mission” and in a briefing in Washington with the Prime Minister’s Economic Advisory team during their USABC-organized U.S. study mission.

Following our previous advocacy efforts with Bank Negara Malaysia (BNM) on their proposed regulations on outsourcing and electronic payments, the Council is developing an advocacy letter regarding BNM’s draft Technology Risk Management Exposure (RMiT) regulations. The proposed RMiT sets out extensive rules for financial institutions' technology risk management frameworks including: Cybersecurity management; frameworks for technology system development, cryptography, data center management; network resilience standards; third-party service providers; outsourcing; software standards; security standards; and auditing. In addition to using inputs from members to develop comments on each element of the RMiT draft, the Council will recommend that BNM use the provisions in the outsourcing regulations in the RMiT and require a non-prescriptive technology approach for institutions to meet regulatory requirements so that they can benefit from competing and diverse technology solutions.

The Council is participating in a global advocacy effort in Indonesia regarding a Government of Indonesia (GOI) tax policy on the insurance industry. Under a new interpretation of existing regulation, tax deductions are no longer being allowed for claim expenses. Several insurance companies have been audited by the GOI and are now being subjected to higher tax obligation in 2018 and back taxes and penalties in 2016-2017. The Council is collaborating with U.S. insurance industry groups and both foreign and local trade associations to coordinate an advocacy approach to the GOJ which would include highlighting the potential damage of this tax to the domestic industry and how it differs from the tax policies of major economies in Asia.

Membership

As 2018 comes to a close, the Membership Team would like to thank all 156 members for their support this year. Going into 2019, we will be welcoming four new members: Speyside Group and Symantec at the Corporate Level and Diageo and VMware at the Chairman’s Council Level.

Diageo is the leading premium spirits business in the world by volume, net sales and operating profit. It produces and distributes eight of the world's top 20 spirits brands. Diageo is also one of the few international drinks companies that span the entire beverage alcohol market, offering beer, wine and spirits. Its well-known brands include Smirnoff vodka, Baileys cream liqueur, Johnnie Walker Scotch whisky, José Cuervo tequila, Tanqueray gin, Captain Morgan rum, Guinness beer, and wines from Mey Icki, Chalone and the Acacia Winery. Diageo products are sold worldwide.

Speyside Group is an independent public policy, reputation and communications group working with global companies and organizations. It has three divisions: Speyside Corporate Relations, a global emerging markets communications and public policy consultancy with teams on the ground across Latin America, Central and Eastern Europe and sub-Saharan Africa; Speyside 360, a global political, policy and competitive monitoring services, providing companies and organizations with commercially focused market insight and analysis; and Speyside Health, a specialist public policy, corporate reputation and market access boutique, supporting healthcare companies and organizations with strategy and delivery.

Symantec is the global leader in information security, providing a broad range of software, appliances and services designed to help individuals, small and mid-sized businesses, and large enterprises secure and manage their IT infrastructure. Symantec's Norton brand of products is the worldwide leader in consumer security and problem-solving solutions.

Regional Highlights

ASEAN

Major Developments

U.S.-ASEAN Internship Program

The Council and the U.S Mission to ASEAN convened the second event of the U.S.-ASEAN Internship Program promotion series in Jakarta on December 6 with more than 200 students present. The event discussed “How to Prepare for an Impressive Interview for your Internship Application: Walk in as a Jobseeker, Walk out as a Hired Employee.” Three experts from the Regional English Language Office of General Electric Indonesia and Apple Developer Academy shared practical knowledge and skills for a successful job interview according to the standards of the U.S. companies operating in Southeast Asia. The Chargé d’affaires of the U.S. Mission to ASEAN, Ambassador Piper Campbell, and Deputy Secretary-General of ASEAN for Community and Corporate Affairs AKP Mochtan delivered opening remarks in the event. For members interested in this program, please contact Marcella Suwandhi at msuwandhi@usasean.org for further information.

On December 10, more than 220 entrepreneurs from Yangon and neighboring cities participated in a one-day SME workshop entitled “Digital Transformation to Boost Competitiveness.” The workshop is a joint initiative between the Council, the US ICT Council for Myanmar, Max Myanmar Holding Co., Ltd., the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), and the Myanmar Young Entrepreneurs Association (MYEA). It featured knowledge-sharing sessions on SMEs’ digitization and access to regional e-commerce markets from government, local business chambers and senior executives from Cisco, Facebook, Visa and successful local SMEs. For detailed information regarding the workshop, please contact Vinsensius Kangen at vkangen@usasean.org.

Looking Ahead

The Council is pleased to introduce the 2019 SME Work Plan and to open sponsorship opportunities for our members. The Work Plan focuses on improving SME digital and regional competitiveness which is in line with the Council's overarching Digital Economy advocacy theme. The 2019 Work Plan will focus on four initiatives: (i) In-country Training and Workshops; (ii) ASEAN SME Academy; (iii) SME Advocacy Dialogue; and (iv) SME Newsletter. A report of the Council's 2018 SME activities as of December 2018 is available here. Please contact Mario Masaya at mmasaya@usasean.org or Vinsensius Kangen at vkangen@usasean.org with any questions and to express interest.

With the CPTPP going into force on December 30, businesses in Japan, Singapore, Canada, Mexico, Australia and New Zealand will see the first reduction in tariff rates for trading goods and services between their respective markets. On January 1, another round of tariff rate reductions will go into effect. Vietnam has also ratified the CPTPP agreement and will benefit from the tariff reductions after it submits its official ratification document with the CPTPP Secretariat in New Zealand on January 14, 2019.

Advocacy

The Council will utilize upcoming engagement opportunities with the Government of Brunei and the Government of Malaysia to advocate for successfully completing the respective CPTPP ratification processes.

Industry Highlights

Customs

Major Developments

On December 4, the new Commissioner of the Philippine Bureau of Customs (BoC), Rey Leonardo Guerrero, issued a Memorandum Order (available here) that made a series of changes to declarations and reassertion of the laws on valuation. According to the BoC, the changes will increase efficiency and decrease port congestion. One of the key changes will be a substantial restriction in the usability of provisional declarations by importers. BoC asserts that the provisional system is making clearance problems worse, but it might also make the valuation system more rigid. Since Rey Leonardo Guerrero became Commissioner in November when the previous Commissioner and around 20 deputies resigned amid scandal, he has promised to clean up the BoC. Since then, 600 military personnel have been temporarily transferred to the BoC to bolster enforcement activities, and the Philippine Drug Enforcement Agency has filed criminal charges against several people involved in the smuggling scandal.

Looking Ahead

The Customs Committee held its final call of 2018 on December 14 and began planning for 2019. For the first half of 2019, the Committee is exploring organizing an anticounterfeiting Workshop for the ASEAN Customs Enforcement and Compliance Working Group in February, co-hosting with the Australian Border Force a workshop on health and safety risks from counterfeit goods in March, and bringing a delegation to the January ASEAN Trade Facilitation Joint Consultative Meeting and the April meeting of the ASEAN Coordinating Committee on Customs. This will all culminate with the Council’s annual delegation to the ASEAN DirectorsGeneral of Customs Meeting, scheduled for June 11-13 in Vientiane, Laos. More information about all these events will be distributed soon.

In mid-November, the Indonesian Ministry of Defence (MoD) released a list of recent military exports as evidence of the country’s growing defense industrial capability. According to Rear Admiral Agus Setyadi, the head of the MoD's Defence Facility Agency, which oversees procurement and exports, local Indonesian defense firms had secured exports worth USD284.1 million between 2015 and 2018. He noted that these sales were attributable primarily to four companies: aerospace manufacturer PT Dirgantara Indonesia (PTDI), ship builders PT PAL and PT Lundin, and land systems company PT Pindad. Some of the sales made include CN235 and NC212 transport aircraft, strategic sealift vessels, small patrol crafts, and other munitions and weapons. RADM Setyadi also added that it is the priority of his government to support the growth of Indonesia’s defense industrial capability and that they intend to do so through: supporting local defense development and production, cooperating with foreign companies through government-to-government agreements, and defense offsets.

On November 20, Philippines Foreign Secretary Teodoro Locsin, Jr. and Chinese Foreign Minister Wang Yi signed a Memorandum of Understanding agreeing to jointly explore and develop oil and gas resources in the West Philippine Sea, the area of the South China Sea that falls within the Philippines’ Exclusive Economic Zone. The MOU was one of 29 signed between the Philippines and China during Chinese President Xi’s two-day state visit to the Philippines. The state-owned China National Offshore Oil Corporation and a yet-to-be-decided Philippine counterpart will execute the joint exploration and development plan. The energy deal has been met with strong opposition and skepticism from the public and many politicians, who allege that the deal could potentially undermine the country’s territorial claims in the South China Sea. More information on the MOU and its potential implications for Philippine-Sino relations can be found here.

At a conference earlier this month, Nguyen Quyet Thang, director of the market division at the PetroVietnam Gas Corporation, said that due to declining domestic gas supply and rising electricity demand, Vietnam will experience a gas supply shortage as early as 2020, requiring it to purchase liquefied natural gas (LNG) from overseas exporters. The government is building two gas storehouses in Vung Tau and Binh Thuan Province, which are scheduled to be completed in 2020 and 2023, respectively. The government will also attempt to develop a policy framework aimed at stimulating Vietnam’s nascent LNG industry. More information on this topic can be found here.

Advocacy

The Council, in conjunction with the ASEAN Centre for Energy, is soliciting sponsorship for a publication that will examine how Industry 4.0 is transforming ASEAN's energy sector. The changes brought about by the innovative technologies and processes that characterize Industry 4.0 will affect multiple sectors. In the energy sector, Industry 4.0 is most readily seen in the trend of digitalization and the implications this trend has for improving energy efficiency and the operations of energy assets, as well as the application of big data and analytics to provide deeper insight into patterns and trends. The report’s main goal is to highlight the best practices and recommendations of our member companies that have had to adapt to digitalization in the energy sector. We want the report to serve as a stepping stone to deeper engagement with the ASEAN Energy Ministers during the annual ASEAN Ministers of Energy Meetings (AMEM). Specifically, with the support of ACE, we aim to present the report at the 37th AMEM in September 2019. The report is also meant to feed into future projects examining how the digitalization trend can help ASEAN achieve the key goals of the ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025.

The report will include:

An overview of the trend of digitalization in ASEAN’s energy sector

Case studies on how U.S. companies operating in ASEAN’s energy sector have successfully adapted to the digitalization trend

Recommendations for ASEAN Governments on what policies to implement to best position their energy markets for the digitalization trend.

For more information on the report and sponsorship opportunities, please contact Riley Smith at rsmith@usasean.org.

Vietnam’s Ministry of Finance (MOF) recently released a second draft of the Law on Securities for public consultation (full text of the draft here in Vietnamese). The State Securities Commission (SSC) is revising the law after recognizing that the current Securities Law, which was introduced in 2006, is now inadequate. According to Deputy Minister of Finance Huynh Quang Hai, the government is hoping that the new law will continue to encourage development of the market in a faster, stronger and more sustainable manner. The public consultation ended on December 2, and the draft law is expected to be submitted to the Government in the second quarter of 2019 and then to the National Assembly in the fourth quarter of 2019. Changes in the draft law include new conditions for public company status, private placement, IPOs, redemption of shares, new triggering events of public offer to purchase, expanded scope of “related person,” and changes to acquiring an operation license and enterprise registration certificate for securities companies and fund management companies. The draft law also lifts the general mandate for 49 percent foreign ownership caps in public companies and harmonizes the definition of “foreign ownership ratio” with the Law on Enterprise. The change in ownership rules will apply to more than 200 conditional sectors but will exclude key sensitive sectors.

The Ministry of Health and Health Promotion Board of Singapore are contemplating a range of efforts to cut the population’s sugar intake to reduce the rate of obesity and diabetes. Diabetes was flagged as one of the key long-term issues for Singapore by Prime Minister Lee in a National Day Rally in 2017. According to him, one in nine Singaporeans have diabetes, and diabetes currently costs the country more than S$1 billion a year. The Ministry is seeking public consultations on four proposed non-exclusionary measures: (i) mandatory front-of-pack nutritional label; (ii) stricter advertising regulations; (iii) excise duty on manufacturers and importers; and/or (iv) nationwide ban on the sale of higher-sugar pre-packaged drinks.

Many experts believe that a total ban on higher-sugared drinks would be the most effective policy but would also be politically unpopular. At present, drinks with more than three teaspoons of sugar (12g) cannot be sold in schools and other government premises. Major manufacturers have also pledged to remove drinks with more than six teaspoons (24g) of sugar. Seven industry leaders – Coca-Cola, F&N Foods, Malaysia Dairy Industries, Nestle, PepsiCo, Pokka and Yeo Hiap Seng – have also committed to a maximum sugar content of 12 percent for all their drinks sold in Singapore by 2020.

The use of a sugar tax has been an ongoing debate in the Singapore Parliament since 2016. Critics have claimed that it is unfair to single out sugar when other factors such as fat consumption, low activity levels and even genetics all contribute to obesity and related diseases like diabetes. Some 39 countries, states and cities around the world today have already introduced some form of nutritional taxation, with sugar-sweetened beverages being the primary target. This includes neighboring states in the region such as Brunei, Cambodia, Laos, the Philippines and Thailand.

The public consultation paper may be accessed here. For any comments or feedback on the possible measures, please submit your inputs to Sunita Kapoor at skapoor@usasean.org by January 9. A consolidated draft will be circulated for review before final submission to the relevant agencies.

Looking Ahead

Across the food value chain in ASEAN, there is a growing public discussion around ensuring that the food that we eat is both safe and nutritious. From farm to fork, these two most fundamental qualities and dietary descriptors of our food supply are becoming increasingly intertwined. The Council, CropLife Asia and the EU-ASEAN Business Council are seeking to partner with food value chain stakeholders regionally and internationally to conduct public events in Bangkok and Hanoi in Q1 2019 to discuss this, highlight efforts under way to address the dilemma, and share perspectives on how stakeholders can work together to yield more sustainable progress in this area going forward. The first of such initiatives will be an “ASEAN Safe, Nutritious Food” workshop in Hanoi, Vietnam in Q1 2019. The Council is working on a finalized agenda and will keep Food and Agriculture Committee members updated. For any questions, inputs or comments, please contact Sunita Kapoor.

In late November, a bicameral conference committee of lawmakers from the Philippines Senate and House of Representatives approved the Universal Healthcare (UHC) Bill, which would provide all Filipinos with healthcare in a proposed National Health Insurance Program. If signed into law, the Philippine Health Insurance Corporation (PhilHealth) would oversee the program and all Filipinos would immediately gain access to a full spectrum of healthcare and services, while some can get more health benefits by paying higher premiums. In addition, the bill would create a Health Technology Assessment Council which would craft recommendations for the development of policies and programs as well as help to choose PhilHealth benefit packages. Funds for the implementation of UHC, which would be in phases, would come from the Department of Health (DOH) annual budget, revenues from sin taxes, the Philippine Amusement and Gaming Corporation, the Philippine Charity Sweepstakes Office, PhilHealth members’ contributions, and Government subsidies to PhilHealth; according to the DOH, about P257 billion would be needed to implement UHC in its first year. Looking ahead, the Senate and the House will now have to ratify the reconciled version of the bill before it can be signed into law by President Rodrigo Duterte.

Advocacy

The Council held its fourth quarter Health and Life Sciences (HLS) Committee Call on December 4. The call reviewed the Council's recent activities in the HLS sector and discussed members' priority issues and desired activities for 2019. The Council has put together a draft 2019 HLS Committee work plan based on discussions during the call. The work plan will guide the HLS Committee's work and will help the Council focus its resources on serving our members' interests throughout the year. To request a copy or to send any further input or feedback on the draft Work Plan, please contact Lucuis Lee at llee@usasean.org by January 11.

On December 7, the Philippines formally appointed Gregorio Honasan as the new Department of Information and Communication Technology (DICT) Chief, assuming the leadership role from Acting Secretary Eliseo Rio, Jr. For more information, see our update here.

The Committee of Inquiry (COI) on Singapore’s most serious cyber-attack drew to a close on November 30. The sophisticated cyber-attack on SingHealth’s database took place in June and resulted in the unauthorized access and duplication of non-personal information of 1.5 million people and dispensed the medicine records of 160,000 people. For more information, see our update here.

Supporting Thailand’s recently announced 2019 ASEAN Chairmanship theme, “Advancing Partnership and Sustainability,” Thailand’s Ministry of Digital Economy and Society (MDES) is preparing a plan that aims to support continued cooperation among ASEAN nations and catalyze Thailand’s digital transformation. For more information, see our update here.

Advocacy

The Council conducted its 2018 Business Mission to the ASEAN Telecommunications and Information Technology Ministers Meeting from December 4-6. The Mission included the Council’s first-ever plenary engagement with all 10 TELMIN Leaders, as well as the Secretaries Generals of ASEAN and the ITU. For more information, please contact Shay Wester at swester@usasean.org or Ella Duangkaew at eduangkaew@usasean.org.

Thailand’s draft Cybersecurity Bill was revised following a public hearing period that ended in October. The latest revised bill was released (in Thai) on November 16, and a second revised version was released on December 5. For more information, please contact Ella Duangkaew at eduangkaew@usasean.org or Praab Pianskool at praab@usasean.org.

On November 3, Vietnam's Ministry of Public Security (MPS) published the official draft decree for the Law on Cybersecurity (LOCS) and opened the draft for public comments until January 2. The Council developed an industry submission on the draft decree, which was translated and submitted to the government. Please contact Vu Tu Thanh at tvu@usasean.org and Ella Duangkaew at eduangkaew@usasean.org with any questions.

Singapore has launched the new government agency “Infrastructure Asia” to spur investments and support regional infrastructure projects. A second initiative, Singapore Infrastructure Dispute-Management Protocol, was also introduced to help parties manage disputes and minimize the risk of time and costs overruns. As a regional financial hub, Singapore hopes to play the role of a neutral and reliable facilitator between private investors and Southeast Asian states. Other regional infrastructure development bodies based in Singapore include the Infrastructure Financing Center of Excellence (INFCOE) and the Asia Infrastructure Center of Excellence (AICOE) which is the "sister entity" to the ASEAN Infrastructure Fund (AIF) headquartered in Malaysia. The Asian Development Bank estimates that developing economies in Asia will need to invest about US$26 trillion in infrastructure projects until 2030. Singapore aims to “increase [the] bankability” of projects and cooperate more closely with various stakeholders by leveraging its comparative advantages of a robust ecosystem between project structuring and development, and financial and legal advisory. In 2016 and 2017, Singapore was the largest overseas investment destination for China along the Belt and Road, capturing 22.3 percent of total investment outflow from China to the Belt and Road countries. With this initiative, Singapore may come to be an effective counterweight amid rising regional concerns of over-dependence on China and global protectionist trends.

Country Highlights

Brunei

Major Developments

The World Bank’s 2019 Ease of Doing Business report ranked Brunei as the 55th country out of 190 countries. Brunei scored 72.03 percent in the report and improved one spot from number 56 in 2018. Brunei’s ranking among ASEAN countries puts it behind Thailand, Malaysia and Singapore. Brunei’s Ease of Doing Business Unit stated in a press statement that the Brunei government would strive to improve its business ecosystem as it looks to diversify its economy. Brunei’s progress in achieving reforms to create a business-friendly environment aligns with goals and strategies outlined in the Brunei Vision 2035. Brunei’s policy changes to reduce bureaucratic inefficiencies, improve information sharing and reduce lag time will improve its outlook to investors and encourage development of local small and medium-sized enterprises which are central strategies to achieving its goals. Brunei’s focus on improving its business environment has yielded results with continuous improvement in its ease-of-doing-business rankings over the last five years from 105th to 55th. Brunei’s regulatory reforms present an attractive offer for foreign investment as it seeks to continue diversifying its economy to reduce dependence on the energy sector.

Looking Ahead

The 2019 Brunei Business Mission will take place January 29-30 in Bandar Seri Begawan. Please click here to register, and contact Artha Sirait with any questions or if you have proposals to engage the Government of Brunei on its priorities to diversify its economy , which will include the financial sector (electronic payments, insurance, banking and financial inclusion), ICT sector (digital economy, cyber security), and energy sector.

At a high-level seminar on the Fourth Industrial Revolution (4IR) and regional cooperation last month, Jayant Menon, Asian Development Bank lead economist on trade and regional cooperation, called on the Cambodian Government to step up its efforts to align its institutions and policies with the 4IR. Menon indicated that 4IR is already having an impact on multiple aspects of Cambodian society and its economy. He emphasized that developing nations such as Cambodia have the advantage of bypassing traditional industrial development phases and taking advantage of the technology that developed countries are utilizing, in a process Menon called “technological leapfrogging.” This process is particularly crucial for Cambodian small and medium enterprises, which make up a significant bulk of business and employment in Cambodia, as they work towards participating in regional and global trade. Pursuing educational reforms that prioritize science, technology, engineering and mathematics will help to train a new generation of skilled laborers, for which Cambodia is currently facing a deficit, and make way for a more vibrant, innovative and knowledge-based economy. The Ministry of Tourism’s 2017 annual report showed that Lao tourists to Cambodia stood in third place with more than 500,000 visitors. The report shows that in the first six months of this year, Cambodia saw over 200,000 Lao visitors.

On November 13, President Joko Widodo ratified seven trade agreements including the ASEAN-Australia-New Zealand FTA (AANFZTA), ASEAN-India FTA (AITISA), ASEAN-Korea FTA, ASEAN-China FTA, ASEAN agreement on medical device directive, the ninth protocol of the ASEAN framework agreement on services and the Indonesia-Pakistan preferential trade agreement (IP-PTA). The next step will be to forward the ratified agreements to the Law and Human Rights Ministry for promulgation. The Indonesian government is keen to boost its economy by gaining access to more markets and lowering barriers to export its goods. Among the trade agreements still pending for Indonesia are the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), the Regional Comprehensive Economic Partnership (RCEP) and the Preferential Trade Agreement (PTA) scheme with Mozambique, Tunisia and Morocco.

Indonesia’s statistics bureau stated that Indonesia’s GDP grew 5.17 percent in the third quarter of the year. This represented a 0.1 percent decrease from the second quarter’s 5.27 percent growth. Indonesia’s GDP growth has hovered around the 5 percent mark throughout most of President Jokowi’s presidency, nowhere near the 7 percent goal that the president had set at the start of his term. The slowdown in the third quarter has been attributed to lower household consumption and weakened foreign trade. Analysts have pointed to exports as a key drag on growth over the next year with depressed coal and palm oil prices. According to Indonesia’s statistics bureau chief, Suhariyanto, declining non-oil and gas commodity prices as well as slower growth in main trading partners like China and Singapore are key factors in explaining Indonesia’s negative foreign trade in the third quarter. Indonesia’s weakening currency is also expected to dampen future growth. The Indonesian rupiah is currently the second worst performing currency among emerging Asian markets after a sell-off of Indonesian assets in September following reports of a widening current account deficit caused the rupiah to tumble. Indonesia’s central bank has raised interest rates five times since May to help prop up the rupiah. Finance Minister Sri Mulyani had informed Parliament in October that the 2018 growth rate is more likely to be 5.14 percent as opposed to the official GDP growth target of 5.4 percent.

Advocacy

On December 17, the Council held a meeting with Director General of Taxation Robert Pakpahan and the Directors under his purview at the Ministry of Finance. The meeting is a follow-up to the 2018 Indonesia Business Mission, in which Director of International Taxation John Hutagaol offered the Council a regular platform to provide updates and discuss issues around taxation. The meeting served as a platform for a productive discussion on Indonesia’s tax audit assessment for corporate direct tax and VAT, outstanding tax claim, tax implication on the life insurance industry, valuation on inter-company transactions and a decentralized tax audit process. DG Pakpahan also invited the Council to a socialization session for the upcoming Ministerial Regulation on Advanced Pricing Agreement (APA) which will serve as a tool to avoid disputes on transfer-pricing adjustment. Members will have more opportunities to engage his team during further technical meetings.

The Lao PDR National Assembly has approved Prime Minister Thongloun Sisoulith’s proposals for new appointments in the positions of Minister of Public Security and Acting Governor of the Bank of the Lao People’s Democratic Republic, according to reports by the Vientiane Times and Lao News Agency. For more information, see our recent Laos Update here.

According to the World Bank, Malaysia is on track to becoming a high-income nation in the coming years. This statement was released by World Bank Vice President for East Asia and Pacific Victoria Kwakwa in conjunction with her official four-day visit to Malaysia, including meetings with the Prime Minister, Finance Minister and Central Bank Governor. She highlighted Malaysia’s solid foundations and diversified economy as indicators of Malaysia’s readiness to progress towards becoming a high-income country.

Tensions between Malaysia and Singapore over territorial disputes have cooled after de-escalation attempts from both sides. The first dispute arose because of Malaysia’s unilateral decision to extend the Johor Bahru port limits beyond Malaysia’s claims in their 1979 map. A series of back-and-forth arguments ensued between both governments with ministers weighing in. The second dispute is over the management of airspace over southern Johor. The current agreement between Malaysia, Singapore and other regional countries signed in 1973 delegates management of southern Johor’s airspace to Singapore. The dispute started when Malaysia Transport Minister Anthony Loke stated in parliament that the country is seeking to reclaim its delegated airspace over the area, citing sovereignty and national interest concerns. Malaysia has pointed to the recently published Instrument Landing System procedures at Seletar Airport as disruptive to development and shipping operations in Pasir Gudang. Both countries have agreed to a meeting during the second week of January 2019 to discuss these issues.

Sabah’s United Malays National Organisation (UMNO) branch saw a mass exodus from the party as four out of five Members of Parliament, nine out of ten assemblymen, 21 out of 25 division chiefs and two supreme council members resigned. Their main concern was with UMNO’s lack of party direction and the untenability of UMNO’s political direction and relevance in Sabah. The former UMNO members have indicated that those who are in elected office will remain independent for now and have no plans to join any parties. They also mentioned that they will continue to serve in their roles until a “new political vehicle” is found. The group will discuss their plans soon and have said they intend to work as a unified group. The loss of members in Sabah’s UMNO branch continues the party’s membership slide and reduces the opposition coalition’s hold at both the state and federal level.

Advocacy

Malaysia's Communications and Multimedia Commission (MCMC) has drafted a national fiberization and connectivity plan (NFCP) to enhance the country's broadband infrastructure. The NFCP aims to improve broadband quality and coverage by enabling affordability and availability of internet access for all and expanding fiber networks. The NFCP is meant to be implemented over the next five years (until 2023). Click here to review the draft National Fiberisation and Connectivity Plan. The Council has drafted comments to MCMC based on member feedback. For any questions, please contact Kim Yaeger at kyaeger@usasean.org or Ella Duangkaew at eduangkaew@usasean.org.

During the Council's Myanmar Business Mission December 11-13 in Yangon and Nay Pyi Taw, the Council's delegation of 12 leading American companies had the opportunity to engage with the newly created Ministry for Investment and Foreign Economic Relations (MIFER), among other key ministries. This ministry, which was just created in November, is headed by Union Minister U Thaung Tun, who concurrently serves as National Security Advisor and Chairman of the Myanmar Investment Commission. The aim of the new Ministry is to streamline the investment process (which includes company registrations, sectoral approvals, permits, etc.) and serve as a "one-stop shop" for all new and existing investors to improve the ease of doing business in Myanmar. This development can be seen as a step in the right direction on the Myanmar Government's part to attract more foreign direct investment into the country and bring about the full potential of newly amended legislation such as the Myanmar Investment Law and the Myanmar Companies Law. The Council has long advocated for the need to streamline the internal approval processes across various ministries, and we welcome this new positive development. We were also proud to have been the first foreign delegation to meet with Minister U Thaung Tun of the MIFER since its creation.

On December 11, the United States officially returned the Balangiga bells as an act of friendship, bringing some closure to national wounds over the Philippine-American war. Joseph Felter, U.S. Deputy Assistant Secretary of Defense for South and Southeast Asia, brought the bells aboard the U.S. Air Force plane, the Spirit of MacArthur, named after Gen. Douglas MacArthur who liberated Manila from Japanese invaders toward the end of World War II. U.S. Ambassador Sung Kim reflected on the historic return in his statement, citing the 2017 ASEAN Defense Ministers Meeting in Clark when U.S. Defense Secretary James Mattis met with Philippines Defense Secretary Delfin Lorenzana to discuss security cooperation and opportunities to further strengthen the U.S.-Philippine defense relationship. Media reports speculate that President Duterte may visit the United States in the summer of 2019, quoting Philippine Ambassador to the United States Jose Manuel Romualdez, “I think that this is a good reason for him to now go to the United States.”

Moody’s forecasts the country's real GDP to grow 6.3% and 6.2% in 2018 and 2019, respectively – rates that are among the highest in the region, although lower than the 6.7% recorded in 2017. However, accelerating inflation is a risk. Favorable macroeconomic factors will underpin asset performance even as loans grow rapidly, but sharper-than-expected increases in interest rates and a heavy concentration of exposures to large conglomerates pose key risks to asset quality. Moody’s also affirmed its stable outlook for the Philippine banking system over the next 12 to 18 months assessing the following six key drivers for the system’s outlook: operating environment (stable), asset quality (stable), capital (stable), funding and liquidity (deteriorating), profitability and efficiency (improving) and government support (stable).

The Philippines Department of Energy officially launched the Philippine Conventional Energy Contracting Program (PCECP), setting in motion the bidding and awarding of petroleum service contracts. Applicants have two options: Bid on 14 pre-determined areas all over the country within 180 days from November 22 or nominate and publish other areas of interest to them and submit their application at any time of the year subject to a “challenge” period of 60 days. Accepted applications will be evaluated by the DoE’s centralized review and evaluation committee based on the criteria under Department Circular No. DC2017-12-0017.

The Philippine Congress approved tax amnesty bills for a bicameral conference. The House approved House Bill (HB) No. 8554 seeking to grant amnesty for estate taxes, national internal revenue taxes and tax delinquencies for 2017 and prior years. The Senate approved Senate Bill 2059 that would grant amnesty on all unpaid internal revenue taxes, including estate, value-added and excise taxes, in 2017 and previous years. For estate taxes, taxpayers could avail themselves of a reprieve and pay a rate of 6 percent based on the total net estate. For other internal revenue taxes, only 5 percent of the total net worth, or a minimum of tax depending on the subscribed capital for corporations, would be collected. The tax amnesty bills are part of a broader tax reform under the Duterte administration.

Singapore faces two Malaysian protests. One is over Singapore's publication of the Instrument Landing System (ILS) and ILS Approach Procedures for Seletar Airport, citing the impact of the Seletar Airport flight path on developments and shipping operations in Pasir Gudang. The other is on outstanding Singapore-Malaysia maritime boundary delimitations, including the new Johor Bahru Port Limits. On December 12, Singapore Transport Minister Khaw Boon Wan stressed that the country's plans to introduce ILS for Seletar Airport will not pose any safety or security risks in response to his Malaysian counterpart Anthony Loke, who said on his 90-second video posted on Facebook that if the ILS flight path is allowed, Malaysia cannot build tall buildings in Pasir Gudang, Johor, and the Pasir Gudang Port will be subjected to higher risks and multiple restrictions. The two countries are set to have bilateral talks.

Singapore’s Ministry of Trade and Industry (MTI) predicts that Singapore’s economy will grow between 1.5 to 3.5 percent in 2019. MTI’s conservative prediction is due to the possibility of a decline in global investment and consumption spending because of the risk of further escalation of trade conflicts between the United States and its key trading partners. MTI has already revised its 2018 growth forecast from 2.5-3.5 percent to 3.0-3.5 percent.

The Singapore government’s Employment (Amendment) Bill 2018 has been passed and changes to Singapore’s Employment Act (EA) and Employment Claims Act (ECA) are due to take effect from April 1, 2019. Coverage will extend to an additional 430,000 employees. Core provisions will no longer be subject to a salary cap, and will now extend to professionals, managers, executives and technicians (PMETs) earning above S$4,500 (US$3,279.89) per month. Under the amendment, they will have the right to a minimum of seven to 14 days paid annual leave, paid public holidays and sick leave, timely payment of salary, and protection against wrongful dismissal.

The National Legislative Assembly (NLA) has passed a Revenue Code Amendment aimed at reducing fraud, investigating tax obligations and effectively capturing tax from e-commerce businesses. Under the new amendment, any financial institution must disclose information to the Revenue Department for customer accounts with over 3,000 deposits and money transfers annually of any annual amount, or accounts with more than 400 deposits and money transfers totaling over 2 million THB (roughly US$61,087) annually.

In another sign that the much-anticipated and oft-delayed elections could be under way in 2019, the National Council for Peace and Order (NCPO) has officially announced that it will lift its ban on political parties this month (December). Up to this point, the NCPO had only partially relaxed the ban.

On November 15, Prime Minister Prayut Chan-o-cha announced Thailand’s official theme for its ASEAN 2019 Chairmanship: “Advancing Partnership for Sustainability.” The theme will promote initiatives that include a focus on connectivity and developing a strong digital economy. For more information, see our update here.

To support Thailand’s 2019 ASEAN Chairmanship theme, Thailand’s Ministry of Digital Economy and Society (MDES) is preparing a plan that aims to support continued cooperation among ASEAN nations and catalyze Thailand’s digital transformation. For more information, see our update here.

Advocacy

Thailand's draft Cybersecurity Bill was revised following a public hearing period that ended in October. The Council submitted comments for this public hearing on October 12. The latest revised bill was released (in Thai) on November 16. The revised version does not differ vastly from the new version – it maintains a powerful National Cybersecurity Committee, slightly reduced but still heavy-handed penalties and language that is vague. Adjustments have been made allowing agencies to appeal requests for information if they are unable to provide information for contractual or legal reasons, and that the secretary general must file a request in a court of jurisdiction to access data in the case of preventing a cyberattack at the "significant" level of impact. For more information, please contact Ella Duangkaew at eduangkaew@usasean.org.

The sixth session of the 14th National Assembly (NA) ended on November 20 after 22 and a half days of sitting, accomplishing the entire working agenda including law-making, decisions on socio-economic development and supreme supervision fulfilled. Most notably, during the session the NA voted to elect Vietnam Communist Party General Secretary Nguyen Phu Trong as the new President and voted to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and relevant documents. The approval of the CPTPP makes Vietnam the seventh country to ratify the deal. The CPTPP shall enter into force for Vietnam 60 days after Vietnam officially notifies New Zealand, the official depository, in writing of Vietnam's ratification.

The agreement will bring many opportunities for the domestic market and import-export companies in Vietnam, including both domestic and foreign-invested firms. To implement the commitments in the CPTPP, Vietnam will also have to adjust and amend some legal provisions on trade, customs, intellectual property and labor. The Ministry of Justice is instructed to coordinate with relevant ministries and agencies in reviewing existing laws, ordinances and decrees, as well as propose amendments and issue new ones in line with trade-pact commitments. The administration has reviewed more than 265 legal documents, and has proposed, amended and supplemented seven laws. While much work in implementation remains, Vietnam is poised to successfully adopt and integrate the CPTPP.

Advocacy

On November 3, Vietnam's Ministry of Public Security published the official draft decree for the Law on Cybersecurity (LOCS) and opened the draft for public comments until January 2, 2019. The Council has gathered member inputs and has transmitted the finalized industry submission to the Government of Vietnam earlier this month. Please contact Vu Tu Thanh tvu@usasean.org and Ella Duangkaew at eduangkaew@usasean.org with any questions.